If you receive a replacement asset when the CGT event happens, you can choose a rollover only if:
- the replacement asset is not a depreciating asset or held as trading stock when you acquire it
- the market value of the replacement asset is more than the cost base of the original asset just before the event happened.
Consequences of receiving an asset
If you choose to take a rollover when you receive a replacement asset, you disregard any capital gain you make from the original asset. The other consequences are outlined below.
Original asset acquired before 20 September 1985
If you acquired the original asset before 20 September 1985, you are taken to have acquired the new asset before that day.
Original asset acquired on or after 20 September 1985
If you acquired the original asset on or after 20 September 1985, the first element of the cost base and reduced cost base of the replacement asset is taken to be the cost base and reduced cost base of the original asset at the time of the event.
However, you may have to recalculate the first element of the cost base of your replacement asset if the cost base of the original asset included an amount of indexation and you are seeking to apply the CGT discount to a capital gain from the replacement asset.
Example 93: Asset received
Jon acquired land after 19 September 1985 which the state government compulsorily acquired on 14 July 2018. The cost base of the land at the time it was compulsorily acquired was $180,000. As compensation, Jon received another piece of land with a market value of $200,000.
Because the market value of the replacement land was greater than the cost base of the original land just before it was compulsorily acquired, Jon disregards the capital gain made on the disposal of the original land. Jon is taken to have paid $180,000 to acquire the replacement land (that is, the cost base of the original land at the time it was compulsorily acquired).
End of example